Afya Ltd (AFYA, Financial), a leading medical education group in Brazil, has seen a significant surge in its stock price over the past three months. As of September 4, 2023, the company's market cap stands at $1.5 billion, with its stock price at $15.97. Over the past week, the stock price has seen a gain of 9.83%, and over the past three months, it has risen by an impressive 34.88%. The GF Value, a measure of a stock's intrinsic value defined by GuruFocus.com, is currently at $25.45, indicating that the stock is significantly undervalued. This is a shift from three months ago when the GF Value was $28.07, suggesting a possible value trap.
Unpacking Afya Ltd's Business Model
Afya Ltd operates in the education industry, offering a diverse portfolio of courses in addition to Medicine, such as Management, Dentistry, Law, Engineering, Nursing, Psychology, and Accounting Sciences, among others. The company operates through three segments: Undergrad, Continuing Education, and Digital Services. The Undergrad segment provides educational services through undergraduate courses related to medicine and other health sciences. The Continuing Education segment offers specialization programs and graduate courses in medicine. The Digital Services segment provides content and technology for medical education, clinical decisions software, practice management tools, and more. 
Profitability Analysis
As of June 30, 2023, Afya Ltd's Profitability Rank stands at 8 out of 10, indicating a high level of profitability. The company's Operating Margin is 26.94%, better than 85.31% of the companies in the industry. The ROE is 10.46%, better than 62.03% of the companies, and the ROA is 4.64%, better than 61.54% of the companies. The ROIC is 9.67%, better than 74.49% of the companies. Over the past decade, the company has had 6 years of profitability, better than 51.9% of the companies in the industry. 
Growth Prospects
Afya Ltd's Growth Rank is 10 out of 10, indicating strong growth prospects. The company's 3-Year Revenue Growth Rate per Share is 26.80%, better than 86.32% of the companies in the industry. The 5-Year Revenue Growth Rate per Share is 45.00%, better than 94.82% of the companies. The company's future total revenue growth rate estimate over a 3-year to 5-year period is 26.66%, better than 90.62% of the companies. The 3-Year EPS without NRI Growth Rate is 16.90%, better than 58.62% of the companies, and the 5-Year EPS without NRI Growth Rate is 32.20%, better than 86.17% of the companies. 
Top Holders of Afya Ltd's Stock
The top three holders of Afya Ltd's stock are Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio), and Dodge & Cox. Ron Baron (Trades, Portfolio) holds 3,626,035 shares, representing 3.87% of the total shares. Jim Simons (Trades, Portfolio) holds 135,500 shares, representing 0.14% of the total shares. Dodge & Cox holds 27,283 shares, representing 0.03% of the total shares.
Competitors in the Education Industry
Afya Ltd faces competition from Arco Platform Ltd (ARCE, Financial) with a market cap of $907.533 million, Skillsoft Corp (SKIL, Financial) with a market cap of $213.779 million, and Perdoceo Education Corp (PRDO, Financial) with a market cap of $1.14 billion.
Conclusion
In conclusion, Afya Ltd's impressive stock performance, high profitability, strong growth prospects, and significant holdings by top investors make it a compelling investment. Despite facing competition in the education industry, the company's robust business model and future growth estimates suggest that it is well-positioned for continued success. However, investors should always conduct their own due diligence before making investment decisions.
